Contract for Deed Houses in Southern Illinois

					Filed 9/25/06 (opn. on rehearing)

                                    CERTIFIED FOR PUBLICATION

                                      OPINION ON REHEARING

                   COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                          DIVISION ONE

                                       STATE OF CALIFORNIA



RED MOUNTAIN, LLC.,                                D044546

        Plaintiff, Cross-defendant and
        Respondent,
                                                   (Super. Ct. No. GIN013203)
        v.

FALLBROOK PUBLIC UTILITY
DISTRICT,

        Defendant, Cross-complainant and
        Appellant.

FALLBROOK PUBLIC UTILITY
DISTRICT,

        Plaintiff and Appellant.
                                                   (Super. Ct. No. GIN024027)
        v.

RED MOUNTAIN, LLC.,

        Defendant and Respondent,
       APPEAL from a judgment and postjudgment order of the Superior Court of

San Diego County, Lisa Guy-Schall, Judge. Judgment reversed and remanded with

directions; postjudgment order reversed and remanded with directions.



       Asaro, Keagy, Freeland & McKinley, Richard R. Freeland, Steven A. McKinley

and Charles F. Campbell, Jr. for Plaintiff and Respondent.

       Best, Best & Krieger, Bruce W. Beach, Shawn Hagerty, Sachse, James & Lopardo

and Stephen V. Lopardo for Defendant and Appellant.



       Red Mountain, LLC., (Red Mountain) owns undeveloped land adjacent to a

drinking water reservoir (the reservoir) and surrounding property owned by Fallbrook

Public Utilities District (Fallbrook). Red Mountain sued Fallbrook for breach of contract,

specific performance, and inverse condemnation based on Fallbrook's refusal to perform

a written agreement to convey to Red Mountain a 60-foot easement for ingress and egress

(the access easement) across Fallbrook's property. Fallbrook filed a cross-complaint to

quiet title and for declaratory and injunctive relief, in which it alleged that approximately

127 acres of Red Mountain's property was encumbered by a nonexclusive "sanitary

easement" (the sanitary easement), which entitled Fallbrook "to patrol, control and

maintain sanitary conditions" in the easement area in order to keep the reservoir water

free from contamination. Fallbrook alleged that the easement precluded Red Mountain

from developing the land within the easement area.




                                              2
       While this litigation was pending, Fallbrook filed an eminent domain complaint

against Red Mountain condemning a 134.24 acre parcel of land that included all or most

of the sanitary easement area.1 Fallbrook also condemned any and all rights Red

Mountain might have had to the 60-foot access easement. The two actions were

consolidated and, following a bifurcated trial, the trial court entered judgment pursuant to

a jury verdict that awarded Red Mountain damages of $1,464,928 for breach of contract

and inverse condemnation, and compensation of $872,560 for the direct taking in eminent

domain. After it entered judgment, the trial court awarded Red Mountain attorney fees

and other litigation expenses under Code of Civil Procedure sections 1036 and 1250.410.

       Fallbrook appeals from the judgment, contending that the trial court committed

reversible error by (1) failing to construe the access easement in a manner consistent with

the undisputed evidence, and with Civil Code section 1069; (2) relocating the access

easement and failing to limit the scope of the easement to Red Mountain's personal

ingress and egress; (3) failing to interpret the scope of the sanitary easement pursuant to

Fallbrook's declaratory relief cause of action; (4) determining that Fallbrook was liable

for inverse condemnation; (5) admitting evidence of speculative damages; (6) incorrectly

instructing the jury and refusing certain jury instructions that Fallbrook requested;

(7) refusing Fallbrook's request to include questions regarding Fallbrook's contract



1      It is not clear from the record, including the eminent domain complaint, whether
the 134.24 acres that Fallbrook directly condemned includes the entire 127-acre area of
the sanitary easement. However, Fallbrook makes a representation to that effect in its
opening brief.


                                              3
defense of impossibility or impracticability of performance in the special verdict form,

and failing to ensure that the verdict form protected against duplicative damages; and

(8) awarding Red Mountain attorney fees and litigation expenses under Code of Civil

Procedure section 1250.410. We reverse the judgment and the order awarding litigation

expenses.

                    FACTUAL AND PROCEDURAL BACKGROUND

       In 1949, Frank and Lucille Capra sold 53 acres of land to Fallbrook to be used for

the construction of a dam and reservoir. The contract between Fallbrook and the Capras

(the 1949 agreement) included the following provision creating the sanitary easement:

            "[The Capras] also grant to [Fallbrook] a non-exclusive easement
            over the area of the water-shed lying back of the dam to be
            constructed by [Fallbrook], which area consists of approximately
            127 acres, for the purpose of enabling [Fallbrook] to patrol, control
            and maintain sanitary conditions thereon necessary and adequate to
            keep the water stored in [the] reservoir pure, wholesome, potable
            and free from contamination from [the] surrounding water-shed area
            and to enable [Fallbrook] at all times to comply with the Public
            Health Laws of the State of California and the rules and regulations
            of the State Board of Public Health; it being agreed that nothing
            herein contained shall be deemed to prevent [the Capras] having free
            and ready access to [the] 127 acres."

       In 1977, the Capras sold approximately 710 acres of land adjacent to the reservoir

to a group of buyers consisting of James Walter Chaffin and his wife Nola Belle Chaffin,

John Roy Chaffin and his wife Mary Lee Chaffin, and Dr. Frederick E. Jackson and his

wife Margaret J. Jackson (the Chaffin/Jackson group). The Chaffin/Jackson group

immediately transferred approximately 109 of those acres to another group of buyers and




                                              4
planned to develop the remaining land (the Red Mountain Ranch property) into

homesites.

       In February 1978, Fallbrook notified James Chaffin by letter that it required

approximately 18 acres of additional land north of the reservoir for future water storage

and treatment. Fallbrook offered to purchase the land for $3,500 per acre "excluding

reserved road easement areas[,]" and proposed that the "[o]wner may reserve a 50 foot

easement on [the] east and west boundaries of the parcel." The Chaffin/Jackson group

proposed certain conditions to its sale of the 18-acre parcel, one of which was that

Fallbrook agree "to grant seller a 60-foot easement over the existing road on the west

sides [sic] of the parcel being conveyed . . . ." Another was that the 60-foot easement "be

sufficient in scope and magnitude to meet the subdivision requirements of San Diego

County and will be granted to sellers or their successors in interest upon 90 days notice at

any future time."

       At a meeting of Fallbrook's board of directors on August 14, 1978, which James

Chaffin, Dr. Jackson and their attorney attended, the board approved most of the

conditions the Chaffin/Jackson group had proposed. However, the board voted to delete

the condition that the access easement "be sufficient in scope and magnitude to meet the

subdivision requirements of San Diego County." James Chaffin and Dr. Jackson agreed

to the terms that the board approved.

       On August 30, 1978, the parties signed escrow instructions setting forth the terms

of their agreement (the 1978 agreement). With respect to the access easement, the

escrow instructions stated: "[Fallbrook] [a]grees to grant at any future time the following


                                             5
easements to the sellers or their successors in interest upon provision to [Fallbrook] by

the sellers, or their successors in interest, 90 days notice, legal descriptions and

documentation required to accomplish said granting: a 60 foot easement over the

existing road on the West sides [sic] of the parcel being conveyed and the present

[Fallbrook] property described in [its 1949 grant deed] . . . ."2

         In October 1978, James Chaffin and Dr. Jackson died in an airplane crash. The

Chaffin family later acquired the Jacksons' interest in the Red Mountain Ranch property.

After James Chaffin's estate was settled, one-third interests in the property were held,

respectively, by Nola Belle Chaffin, her six children, and John Roy and Mary Lee

Chaffin (collectively the Chaffins). The Chaffins abandoned plans to develop the

property sometime after James Chaffin's death, in part because San Diego County

designated the Red Mountain Ranch property as a possible site for a landfill in the early

1980s.

         In 1981, Fallbrook notified the Chaffins that it was planning to expand the

reservoir, and that the expansion project would require it to excavate a portion of the Red

Mountain Ranch property. Fallbrook proposed a boundary adjustment to accommodate

the project, and offered to place excess fill material removed from the project into two

canyons on the Red Mountain Ranch property "to enhance development of that portion of



2      The existing access easement road referenced in the 1978 agreement ran north
from Mission Road along the west side of the reservoir into the Red Mountain Ranch
property. Mission Road is the main road that runs east-west through the city of
Fallbrook.


                                               6
[the] property." The Chaffins ultimately agreed to sell 3.31 acres of land to Fallbrook to

be used for the reservoir expansion project.

       Construction on the reservoir expansion project began in mid-1983 and was

completed in late 1985. The expanded reservoir obliterated approximately 1,000 feet of

the road that had run along the west side of the reservoir, placing that portion of the road

under a dam and up to 90 feet of water. Fallbrook built a paved road along the west side

of the expanded reservoir (Red Mountain Dam Road) to replace the portion of the old

road that had been destroyed. At its closest point to the reservoir, the new road is

separated from the reservoir by a 6-inch berm. Vehicles traveling at that point on the

road are 30 to 40 feet from the reservoir water, depending on the water level. Fallbrook

installed a gate across the new road, but provided keys to the lock on the gate to the

Chaffins so they could use the road to access the Red Mountain Ranch property.

       In the late 1990s the Chaffins learned that the Red Mountain Ranch property was

no longer being considered as a possible landfill site. In 1999, James Chaffin, Jr.

(Chaffin), with the approval of the other property owners, decided to pursue a subdivision

project on the property. The Chaffins formed Red Mountain for that purpose and

transferred all of their interests in the property to Red Mountain.

       Chaffin hired civil engineer Gary Piro to act as project engineer. Piro's initial

subdivision design showed access to the subdivision from Mission Road along Red

Mountain Dam Road. In early 2000, Fallbrook objected to the use of Red Mountain Dam

Road for access to a subdivision. Fallbrook's chief engineer told Chaffin and Piro that

use of the road for a subdivision would cause Fallbrook to have to cover the reservoir.


                                               7
       Because of Fallbrook's objection to Red Mountain's proposed use of Red

Mountain Dam Road, Chaffin attempted to find a different way to access the subdivision.

He negotiated with an owner of property that fronted Mission Road on the east side of the

reservoir for an access easement that would serve all of the Red Mountain Ranch

property north of Mission Road. However, those negotiations were ultimately

unsuccessful.

       In August 2000, Red Mountain notified Fallbrook that, pursuant to the 1978

agreement, it would provide the documents necessary for Fallbrook to grant Red

Mountain a 60-foot easement over Red Mountain Dam Road. Fallbrook responded with

a letter in which it stated that it would not grant the access easement. Fallbrook

explained that "[t]he increased traffic would require [the reservoir] to be covered due to

health constraints" at a cost of "several million dollars, which [Fallbrook] has not

budgeted and for which [it] would not be inclined to raise rates." Fallbrook added: "As a

practical matter, the 'existing roads' referred to in the [1978 agreement] no longer exist.

Those roads were inundated by the enlargement of [the reservoir] in 1983. That project

was legally noticed throughout the Fallbrook community and the District received no

complaints or requests for reservation of any roadway. Further, [the subdivision

development] proposed now was not anticipated for the Chaffin Ranch use in 1978."

       In June 2001, Red Mountain filed a complaint against Fallbrook for breach of

contract, specific performance and inverse condemnation, based on Fallbrook's refusal to

grant the access easement. Fallbrook answered the complaint and in April 2002 filed a

cross-complaint to quiet title and for declaratory and injunctive relief. In its cross-


                                              8
complaint, Fallbrook asked the trial court to rule that the sanitary easement was valid and

that it precluded Red Mountain's proposed subdivision development. In September 2002,

Fallbrook filed an eminent domain complaint against Red Mountain, condemning 134.24

acres that included the 127 acres of the sanitary easement. Fallbrook's complaint also

condemned any and all rights Red Mountain had to the access easement.

       On the parties' stipulation, the trial court consolidated the two actions for trial and

Fallbrook moved to bifurcate the trial into liability and compensation phases. In

opposition to the motion, Red Mountain argued that the proposed bifurcation would

violate its right to a jury trial on its breach of contract claim. The court granted the

motion, ruling that the court would try liability issues, and the jury would decide the

amount of compensation. However, at oral argument on the motion, the trial court stated

that if "surviving issues of fact will necessarily have to go to the jury [after the first phase

of trial], I will . . . fashion . . . an order that provides for that."

       After the liability phase of the trial was completed, the trial court issued a

statement of decision in which it ruled that: (1) the access easement referenced in the

1978 agreement granted Red Mountain a 60-foot easement over Red Mountain Dam

Road; (2) Red Mountain Dam Road was for Red Mountain's ingress to and egress from

its "northern property . . . appurtenant to [Fallbrook's] reservoir property[;]" (3) Red

Mountain was bound by the language in the 1949 agreement creating the sanitary

easement; and (4) "issues addressing whether the proposed 'development' constitutes a

new burden on [the sanitary] easement, whether inverse or pre-condemnation, eminent

domain remedies, possible contamination of the sanitation easement, and the likelihood


                                                  9
that the development will overburden this easement, are all premature." On November

13, 2003, the court filed an interlocutory judgment on bifurcated issues, in which it set

forth its rulings in the statement of decision.

       On December 1, 2003, Fallbrook made a "final offer" of $900,000 "to resolve all

issues of compensation both as to the direct condemnation and claim of inverse

condemnation . . . ." On the same day, Red Mountain made a "final demand" of

$1,858,000, representing "compensation to be awarded in this proceeding for the taking,

both by eminent domain and inverse condemnation, of all real property and interests in

real property."

       The compensation issues were tried to a jury in February and March of 2004. At

the close of evidence, the court made a finding of inverse condemnation, stating, "It will

be a jury determination as to whether there are damages."3 The jury returned a special

verdict awarding Red Mountain damages of $1,464,928 on its inverse condemnation and

breach of contract causes of action, and $872,560 as the fair market value on February 1,

2004 of the property Fallbrook directly condemned.




3       The trial court did not specify the property it found to have been inversely
condemned. However, based on its finding of inverse condemnation, the trial court later
instructed the jury as follows: "The court has determined that [Fallbrook] is liable to the
Chaffins for the taking of their contractual right to the conveyance of an easement. You
are to determine the amount of compensation payable to the Chaffins for this taking. [¶]
The amount of compensation is to include the diminution, if any, in the value of the
Chaffins' property that would have been served by the easement, caused by the loss of the
easement. . . . [¶] The amount of compensation also includes the amount of consulting
fees and expenses, if any, that you find were proximately caused by the taking."

                                              10
       After the court entered its final judgment on April 14, 2004, Red Mountain filed a

motion for an award of litigation expenses under Code of Civil Procedure section 1036

(applicable to inverse condemnation actions) "and/or" Code of Civil Procedure section

1250.410 (applicable to eminent domain actions). Red Mountain also filed a motion for

an order requiring Fallbrook to deposit the full amount of the judgment with the court.

On July 16, the court granted both motions and ordered Fallbrook "to make the required

deposit in the full amount of the condemnation award . . . ."

       On June 10, 2004, Fallbrook timely filed a notice of appeal from the judgment,

and on August 13 filed a petition for writ of supersedeas asking this court to stay the

order requiring it to deposit the full amount of the condemnation award. On August 25

Fallbrook filed an amended notice of appeal, stating that it was "amend[ing] its notice of

appeal filed June 10, 2004, to include the court's ruling on litigation expenses of July 16,

2004 to be included as an issue on appeal." This court granted the petition for writ of

supersedeas and issued an order stating: "To the extent that the trial court's . . . order

directing deposit of the 'full amount of the compensation award' includes the $1,464,928

award issued for inverse condemnation or breach of contract in connection with the 60

foot easement, the order is stayed pending appeal."

                                       DISCUSSION

             I. Sufficiency of Fallbrook's Opening Brief and Notice of Appeal
                from the Postjudgment Order Awarding Litigation Expenses

       Red Mountain asks this court, on our own motion, to strike Fallbrook's opening

brief and dismiss the appeal because the brief does not include a statement of



                                              11
appealability, as required by California Rules of Court,4 rule 14(a)(2)(B). We exercise

our discretion under rule 14(e)(2)(C) to disregard Fallbrook's technical noncompliance

with the requirement that its opening brief include a statement of appealability, because

the judgment and postjudgment order Fallbrook challenges are both clearly appealable.

       Red Mountain also contends that the amended notice of appeal Fallbrook filed on

August 25, 2004 either relates back to the date of the original notice of appeal filed on

April 14, 2004 and, therefore, is a nullity because it is premature as to the July 16, 2004

postjudgment order, or supersedes the original notice of appeal from the judgment and,

therefore, is untimely as to the judgment. Red Mountain argues that this court should

either dismiss the appeal from the postjudgment order, or dismiss the entire appeal on the

ground that it is untimely.5 Red Mountain's argument implies that when an appeal is

taken from a judgment, an "amended notice of appeal" filed after the time to appeal the

judgment has expired is ineffective to appeal a postjudgment order, even if the amended

notice of appeal identifies the postjudgment order and communicates the intent to appeal

that order.

       We reject Red Mountain's analysis, which places far too much significance on

Fallbrook's use of the word "amended" in its second notice of appeal. A notice of appeal

is to be liberally construed in favor of its sufficiency (rule 1(a)(2)), and it may be deemed



4      All further rule references are to the California Rules of Court.

5      Red Mountain concedes that the postjudgment order awarding litigation expenses
is appealable under Code of Civil Procedure section 904.1, subdivision (a)(2).


                                             12
sufficient if it has not misled or prejudiced the respondent. (ECC Const., Inc. v. Oak

Park Calabasas Homeowners Ass'n. (2004) 122 Cal.App.4th 994, 1003, fn. 5.) As noted,

Fallbrook's amended notice of appeal states: "[Fallbrook] hereby amends its notice of

appeal filed June 10, 2004, to include the court's ruling on litigation expenses of July 16,

2004 to be included as an issue on appeal." Even conservatively construed, the amended

notice of appeal sufficiently perfects Fallbrook's appeal from the July 16, 2004

postjudgment order awarding litigation expenses, as it expressly identifies that order as

"an issue on appeal." Red Mountain does not, and cannot reasonably, contend that it was

misled or prejudiced as to Fallbrook's intent to appeal that order. We deny Red

Mountain's request to dismiss Fallbrook's appeal in whole or in part.

                         II. Construction of the Access Easement

       Fallbrook contends that the trial court's interpretation of the access easement

referenced in the 1978 agreement as being for subdivision use was erroneous because (1)

uncontradicted parol evidence established that the parties intended the easement to be

limited to the Chaffins' personal ingress and egress, and (2) the court was required to

construe the easement in Fallbrook's favor under Civil Code section 1069 (hereinafter,

section 1069). We agree with Fallbrook's second contention.

       Section 1069 provides: "A grant is to be interpreted in favor of the grantee, except

that a reservation in any grant, and every grant by a public officer or body, as such, to a

private party, is to be interpreted in favor of the grantor." (Italics added.) Section 1069's

directive that every grant by a public body is to be interpreted in favor of the grantor

applies only if there is an ambiguity in a grant. (City of Los Angeles v. Howard (1966)


                                             13
244 Cal.App.2d 538, 545.) Here, the parties agree that the 1978 agreement to grant the

access easement is ambiguous as to the scope of the easement. Although the ambiguity is

in an agreement by a public entity to grant an easement, and not in an actual grant, we

conclude that it is appropriate to apply section 1069 in construing the agreement because

the ambiguity concerns the nature and scope of the easement to be granted.6

       Fallbrook argues that because it is a public body, section 1069 mandates that the

ambiguity in the 1978 agreement regarding the scope of the access easement be resolved

in its favor – i.e., the easement provision must be construed as requiring Fallbrook to

grant an easement for personal ingress and egress only. Red Mountain essentially argues

that section 1069 does not require a court to automatically interpret an ambiguity in a

grant by a public entity in the public entity's favor because, as a general rule, all of the

rules of construction should be considered in interpreting a contract, and the true intent of

the parties should govern the interpretation. (City of Manhattan Beach (1996) 13 Cal.4th

232, 238.)

       We have found no citable California case that directly addresses whether section

1069 requires a court to interpret an ambiguous grant by a public body in favor of the

grantor when other rules of construction or extrinsic evidence support an interpretation in



6      In its statement of decision, the trial court noted the provisions in section 1069 that
an ambiguity in a grant is interpreted in favor of the grantee and that an ambiguity in a
reservation is interpreted in favor of the grantor. However, the court did not mention the
provision in section 1069 that "every grant by a public officer or body, as such, to a
private party, is to be interpreted in favor of the grantor." That provision is critical to the
resolution of this case, as the 1978 agreement involved an anticipated grant by Fallbrook,
a public entity.

                                              14
favor of the grantee. However, cases that have addressed the role of section 1069 in the

construction of ambiguous public grants have viewed the statute's public grant provision

as a statutory mandate that takes precedence over other rules of construction.

       The rule that ambiguous grants by the government are to be strictly construed in

favor of the government is long standing and well settled. In 1832 the United States

Supreme Court noted that "[p]ublic grants convey nothing by implication; they are

construed strictly in favour of the king; [citations]." (United States v. Arredondo (1832)

31 U.S. 691, 738.) A key aspect of the rule, expressed in a number of later United States

Supreme Court opinions, is that "nothing passes by the [governmental] grant but that

which is necessarily and expressly embraced in its terms." (Kean v. Calumet Canal &

Improvement Co. (1903) 190 U.S. 452, 498-499, dis. opn. of White, J., italics added; see

additional cases cited in Home on the Range v. AT&T Corp. (S.D. Ind. 2005) 386

F.Supp.2d 999, 1021.)

       More than 100 years ago, the California Supreme Court noted: "[O]ur own

legislature has made it statute law that 'every grant by a public officer or body, as such, to

a private party, is to be interpreted in favor of the grantor.' (§ 1069.) It is certain

moreover, that the principle of construction sustained by the weight of recent authority is

that . . . .' . . . the state is entitled to the benefit of certain well-settled canons of

construction that pertain to grants by the state to private persons or corporations,as, for

instance, that if there is any ambiguity or uncertainty in the act, that interpretation must

be put upon it which is most favorable to the state . . . .' " (City of Oakland v. Oakland

Water-Front Co. (1897) 118 Cal. 160, 175, quoting Illinois Cent. R. Co. v. State of


                                                 15
Illinois (1892) 146 U.S. 387, 468, dis. opn. of Shiras, J., italics added.) The California

Supreme Court later approved the following iteration of the rule: " ' "All grants of the

Crown are to be strictly construed against the grantee, contrary to the usual policy of the

law in the consideration of grants; and upon this just ground, that the prerogatives and

rights and emoluments of the Crown being conferred upon it for great purposes, and for

the public use, it shall not be intended that such prerogatives, rights and emoluments are

diminished by any grant, beyond what such grant by necessary and unavoidable

construction shall take away." ' " (Los Angeles v. San Pedro, etc. R. R. Co., (1920) 182

Cal. 652, 655-656, quoting Shively v. Bowlby (1894) 152 U.S. 1, 10, italics added.)

       In Los Angeles County v. Southern Cal. Tel. Co. (1948) 32 Cal.2d 378, 384, the

California Supreme Court noted that under section 1069, a statutory grant to telegraph

and telephone companies of the privilege to construct telegraph or telephone lines along

or on public roads "must be construed in favor of the state." (Italics added.) (See also,

Southern California Gas Co. v. City of Los Angeles (1958) 50 Cal.2d 713, 719-720 [as a

public grant, a franchise granted to a public utility for the use of streets is to be construed

in favor of the public interest].)

       Pariani v. State of California (1980) 105 Cal.App.3d 923 involved a dispute over

whether a reservation of mineral rights in a land grant by the state reserved to the state

the geothermal resources underlying the granted lands. Noting the federal rule that grants

by the federal government are to be construed in the government's favor, the appellate

court added that under section 1069, "any doubt concerning the scope of the State's

reservation must be resolved in favor of the State." (Id. at p. 932, italics added.)


                                              16
       These cases support the proposition that any ambiguity in a grant by a public

entity to a private party must be construed in favor of the public grantor, and that such a

grant passes only those rights and interests to the grantee that are necessarily and

expressly embraced in its terms. The language of section 1069 provides clear support for

that proposition. Section 1069 states that "every grant by a public officer or body . . . is

to be interpreted in favor of the grantor." (Italics added.) Words of a statute are to be

given a plain and commonsense meaning. When they are clear and unambiguous, there is

no need to resort to other indicia of legislative intent, such as legislative history, to

construe the statute. (Quarterman v. Kefauver (1997) 55 Cal.App.4th 1366, 1371.)

Further, " '[a] statute should be construed so that effect is given to all its provisions, so

that no part will be inoperative or superfluous, void or insignificant . . . . ' [Citations.]"

(Rodriguez v. Superior Court (1993) 14 Cal.App.4th 1260, 1269.)

       The adjective "every" in section 1069 modifies only the phrase "grant by a public

officer or body . . . to a private party;" it does not modify the statute's reference to grants

in general. The phrase "every grant by a public officer or body . . . to a private party" is

clear and unambiguous. The dictionary definition of "every," which reflects the plain and

commonsense meaning of the word, is: "being each individual or part of a group without

exception." (Webster's 9th New Collegiate Dict. (1989) p. 430, italics added.)

Accordingly, the rule in section 1069 that every grant by a public body is to be

interpreted in favor of the grantor applies without exception to the construction of

ambiguities in such grants.




                                               17
       As noted, Red Mountain disputes that the public grantor provision in section 1069

takes precedence over other rules of construction. Red Mountain contends that the

primary objective of all contract or deed interpretation is to ascertain the parties' intent

and that when, as here, conflicting evidence of intent is presented as an aid in

interpretation, the trial court's interpretation must be affirmed if it is supported by

substantial evidence. We agree with the general principle that the true intent of the

parties should govern the interpretation of a written instrument, including a grant by a

public entity. Section 1069 will not apply to give the public grantor a greater right than

that for which it bargained when the intent of the parties is clear. (City of Los Angeles v.

Howard, supra, 244 Cal.App.2d at p. 545.) However, when a grant by a public body is

ambiguous, the controlling rule is the provision in section 1069 that every grant by a

public body is to be interpreted in favor of the grantor. In such a case, extrinsic evidence

of the parties' intent is irrelevant.

       We conclude that the trial court erred by failing to interpret the access easement in

Fallbrook's favor pursuant to section 1069. However, an appellant has the burden to

show not only that the trial court erred but also that the error was prejudicial. (Cal.

Const., art. VI, § 13; Code Civ. Proc., § 475; Paterno v. State of California (1999) 74

Cal.App.4th 68, 105.) Error is prejudicial if it is reasonably probable that a result more

favorable to the appellant would have been reached absent the error. (Paterno v. State of

California, supra, 74 Cal.App.4th at p. 105; Pool v. City of Oakland (1986) 42 Cal.3d

1051, 1069.) " '[A] "probability" in this context does not mean more likely than not, but

merely a reasonable chance, more than an abstract possibility.' [Citation.]" (Cassim v.


                                              18
Allstate Ins. Co. (2004) 33 Cal.4th 780, 800.) The requirement to show prejudice also

applies to a claim of instructional error. A judgment is subject to reversal for state law

error involving misdirection of the jury when there is a reasonable probability that in the

absence of the error, the result would have been more favorable to the appealing party.

(Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 574 (Soule); Lundquist v. Reusser

(1994) 7 Cal.4th 1193, 1213 [instructional error is prejudicial when it appears probable

that the improper instruction misled the jury and affected the verdict.].)

       We conclude that if the trial court had construed the access easement as limited to

the Chaffins' personal ingress and egress, there is a reasonable probability that it would

not have ruled that Fallbrook's refusal to grant the easement resulted in an inverse

condemnation of Red Mountain's property. We further conclude that the trial court's

failure to construe the access easement in Fallbrook's favor prejudicially affected the

jury's verdict on Red Mountain's inverse condemnation/breach of contract claim. If the

court had construed the access easement as limited to the Chaffins' personal ingress and

egress and instructed the jury accordingly, it is reasonably probable that the jury would

have found Fallbrook's refusal to grant the easement was not a breach of the 1978

agreement because the easement Red Mountain requested was much broader in scope

than the personal easement Fallbrook had agreed to convey. Accordingly, the matter

must be remanded for both a redetermination of Fallbrook's liability for inverse

condemnation and a retrial to determine whether Fallbrook's refusal to grant the access

easement constituted a breach of the 1978 agreement and, if so, the amount of damages

Red Mountain suffered as a result.


                                             19
       If a jury on remand were to find that Fallbrook breached the agreement to grant

the access easement, the issue regarding damages would be whether the easement would

have enabled Red Mountain to develop the southerly portion of the Red Mountain Ranch

property, even though the easement was limited in scope to personal ingress and egress.

At trial, Red Mountain argued to the jury that it could be made whole for Fallbrook's

refusal to grant the access easement either by an award of breach of contract/inverse

condemnation damages with no severance damages in the direct condemnation case, or

by an award of the same amount as severance damages and damages for Fallbrook's

unreasonable precondemnation conduct in refusing to grant the access easement.

However, Red Mountain's counsel did not ask the jury to award damages for diminution

of the value of all of the property Red Mountain had sought to subdivide and develop;

rather, he asked the jury to award breach of contract/inverse condemnation damages in

the amount of $1,672,308, representing the precondemnation value of Red Mountain's

southerly 207.38 acres as two ranch sites valued at $12,000 per acre, minus the post-

taking value of that acreage as "mitigation land"7 valued at $4,000 per acre, plus

engineering expenses of $13,268.8 The jury's award reflects that the jury accepted this



7      Red Mountain's expert appraiser, Robert Backer, explained to the jury that
"mitigation land" is undeveloped land that a governmental agency permitting a
development requires the developer to purchase to mitigate the environmental impact of
the development. The mitigation land, which can be located on the development site or
elsewhere, is preserved in its undeveloped state.

8      Acreage of 207.38 x $12,000 ($2,488,560) - 207.38 x $4,000 ($829,520) =
$1,659,040; $1,659,040 + $13,268 = $1,672,308. Although Red Mountain's counsel
noted that in November 2000 (the date of valuation for the breach of contract and inverse

                                            20
formula, except that it found the precondemnation value of the southerly 207.38 acres to

be $11,000 per acre rather than $12,000 per acre.9

       If the court had properly instructed the jury that the access easement contemplated

in the 1978 agreement was limited to the Chaffins' personal ingress-egress and the jury

had evaluated Red Mountain's inverse condemnation/breach of contract damages based

on Red Mountain's contractual right to that limited easement, there is a reasonable

probability that the jury would have found Red Mountain's transfer of the easement to

successor owners of two large ranch estates would materially overburden the easement




condemnation causes of action) the Chaffins were "trying to get a subdivision
approved[,]" he went on to state: "But in my analysis as an appraiser [referring to expert
witness Backer], . . . I don't look at what the Chaffins are doing. I make an impartial
determination of what was the highest and best use of the property at that time. [¶] And
in my analysis, Mr. Backer said, the highest and best use after I studied the market and I
studied comparable sales and I studied the adaptability of the property that – the highest
and best use was to use this property as two large, estate-type sites. Okay. Two separate
homesites, large, estate types of sites. [¶] And for that value, . . . the value is $12,000 per
acre for 207 acres. And why is it 207 acres instead of 580 acres? It's because, as
[Backer] testified, he determined that the 207 acres that were in the southernmost portion
of the property – in other words, the most easily served by the Red Mountain Dam road
access – should be viewed separately, because of their proximity to that access, as
acreage that would be likely developed. And all the acreage to the north wouldn't be
really counted in this evaluation because that acreage is too remote from the Red
Mountain Dam access in order to make it palatable." (Italics added.)

9      Acreage of 207.38 x $11,000 ($2,281,180) - 207.38 x $4,000 ($829,520) =
$1,451,660; $1,451,660 + $13,268 (engineering fees) = $1,464,928, the amount of breach
of contract/inverse condemnation damages the jury awarded. Having awarded breach of
contract/inverse condemnation damages, the jury followed Red Mountain's counsel's
directive and awarded no severance damages or damages for precondemnation conduct.


                                              21
and unreasonably interfere with Fallbrook's rights.10 The owner of an easement cannot

materially increase the burden of the easement on the servient estate or impose a new

burden. (Wall v. Rudolph (1961) 198 Cal.App.2d 684, 686.) "Normal future uses [of an

easement] are within the reasonable contemplation of the parties and therefore

permissible, but uncontemplated abnormal uses, which greatly increase the burden, are

not." (12 Witkin, Summary of Cal. Law (10th ed. 2005) Real Property, § 407, p. 478.)

Whether a particular use of an easement by either the servient or dominant owner

unreasonably interferes with the rights of the other owner is a question of fact. (Pacific

Gas & Elec. Co. v. Hacienda Mobile Home Park (1975) 45 Cal.App.3d 519, 528; City of

Los Angeles v. Howard, supra, 244 Cal.App.2d at p. 543.)11 If the jury had found that a

transfer of the access easement to successor owners of two large ranch estates would have

materially overburdened the easement and, therefore, Red Mountain's southerly 207.38

acres could have been used only as mitigation land even if Fallbrook had granted Red

Mountain the access easement, the likely result, assuming liability, would have been a

lower award of damages for inverse condemnation/breach of contract.




10     This analysis assumes that proper construction of the access easement under
section 1069 does not automatically preclude findings of inverse condemnation and
breach of contract against Fallbrook.

11      Fallbrook's position appears to be that any use of the access easement beyond its
historical use for the Chaffins' personal ingress and egress would have unreasonably
interfered with Fallbrook's rights as the servient owner of that easement, as well as with
its rights as the dominant owner of the sanitary easement.


                                             22
       Our reversal of the judgment as to the inverse condemnation/breach of contract

claims requires that the issue of just compensation for Fallbrook's direct condemnation of

Red Mountain's property also be retried. Under a correct interpretation of the scope of

the access easement under section 1069, the trial court could conclude that Fallbrook's

refusal to grant the easement did not result in an inverse condemnation of Red Mountain's

property. In that case, there would be no award of damages for inverse

condemnation/breach of contract. However, Red Mountain would be entitled to seek

severance damages on the direct condemnation claim, as well as damages for Fallbrook's

precondemnation conduct in refusing to grant the access easement and for the direct

condemnation of Red Mountain's contractual right to the easement.

       The award of $872,560 for direct condemnation reflects the jury's determination of

fair market value of the condemned land as of February 1, 2004, as mitigation land with

no access. If there was no inverse condemnation/breach of contract, Red Mountain

would have had a contractual right to an access easement until Fallbrook directly

condemned that right. Under that scenario, a jury on retrial could find that the value of

the property that was directly condemned was higher than the value the jury awarded for

direct condemnation in the first trial.

       The trial court's erroneous interpretation of the access easement and its

misdirection of the jury on that point prejudicially affected the outcome of the trial with

respect to Red Mountain's claims for inverse condemnation and breach of contract.

These errors, in turn, may have prejudicially affected the jury's determination of just

compensation on Fallbrook's direct condemnation claim. Because resolution of the


                                             23
inverse condemnation/breach of contract claims could have affected the determination of

just compensation for the direct condemnation, the judgment is not severable. (Gonzales

v. R.J. Novick Constr. Co. (1978) 20 Cal.3d 798, 805-806.) Therefore, the entire

judgment must be reversed.12




12      Fallbrook's appeal and request for reversal is directed to "the judgment" generally,
not just to the portion of the judgment involving Red Mountain's inverse
condemnation/breach of contract claims. Even if Fallbrook had appealed only those
portions of the judgment involving the inverse condemnation/breach of contract claims,
we could not properly reverse only those portions of the judgment. " 'The test of whether
a portion of a judgment appealed from is so interwoven with its other provisions as to
preclude an independent examination of the part challenged by the appellant is whether
the matters or issues embraced therein are the same as, or interdependent upon, the
matters or issues which have not been attacked. [Citations.] "[I]n order to be severable,
and therefore [separately] appealable, any determination of the issues so settled by the
judgment . . . must not affect the determination of the remaining issues whether such
judgment on appeal is reversed or affirmed. . . .Perhaps another way of saying it would be
that the judgment is severable when the original determination of those issues by the trial
court and reflected in the judgment or any determination which could be made as a result
of an appeal cannot affect the determination of the remaining issues of the suit. . . ."
[Citation.]' [Citation.]" (Gonzales, supra, 20 Cal.3d at pp. 805-806.) Here, as discussed
above, the determination of the inverse condemnation/breach of contract claims could
affect the determination of just compensation on the direct condemnation claim.
        Because the judgment is not severable, Red Mountain was not required to pursue a
cross-appeal from the judgment or to take other steps to ensure that the award of just
compensation for the direct condemnation would be reversed if this court were to reverse
the judgment as to the inverse condemnation/breach of contract claims. "[T]he failure to
take an appeal demonstrates only satisfaction with the judgment as is, not as changed by
a partial reversal. One may elect to stand upon a judgment which, he believes, although
largely in his favor, does not give him all of the benefits to which he is entitled. To avoid
the time and expense of further litigation, he may be persuaded to permit the unfavorable
portions to stand in reliance upon the benefits received in the other parts. In such
instance, to do justice a reversal of the portion from which the appeal was taken might
require a reversal of other provisions." (American Enterprise, Inc. v. Van Winkle (1952)
39 Cal.2d 210, 221, fn. omitted.)


                                             24
                          III. Relocation of the Access Easement

       In the first phase of the trial, the court ruled that the parties had impliedly

consented to relocate the access easement to the new Red Mountain Dam Road after the

"existing road" referred to in the 1978 agreement was obliterated by the reservoir

expansion.13 Fallbrook contends the trial court's ruling was erroneous because the 1978

agreement explicitly referred to the "existing road" as the location of the easement.14

Fallbrook argues that an intention to relocate an easement should be specified in the

granting document so that a floating easement is established.

       We conclude that the trial court's finding that the parties impliedly consented to

relocate the easement was not erroneous. Parties may change the location of an easement

by mutual consent, which may be implied from use and acquiescence. (Johnstone v.

Bettencourt (1961) 195 Cal.App.2d 538, 541-542, Kosich v. Braz (1967) 247 Cal.App.2d

737, 739.) When the parties consent to relocation, their "rights are not affected by the

change, but attach to the new location. [Citation.]" (Johnstone v. Bettencourt, supra, 195

Cal.App.2d at p. 542.) Whether parties have impliedly consented to relocate an easement



13     The trial court in its statement of decision referred to the "existing road"
referenced in the 1978 agreement as the "old dirt road" or "ODR."

14      Fallbrook's main argument under this assignment of error is that the trial court
erred in ruling that the scope of the relocated easement was for "any legitimate or legal
purpose" and that it was not limited to the Chaffins' historic use of the ODR for their own
personal ingress and egress. In light of our conclusion that the trial court was required to
interpret the easement in Fallbrook's favor under section 1069, we limit our discussion in
this section of the opinion to Fallbrook's contention that the court erred in relocating the
access easement.


                                              25
is a question of fact. (Ibid.; see also Stanardsville Volunteer Fire Co., Inc. v. Berry (Va.

1985) 331 S.E.2d 466, 470.)

       Here, the trial court's finding that the parties impliedly consented to relocate the

access easement referenced in the 1978 agreement to Red Mountain Dam Road is amply

supported by undisputed facts that the trial court cited in its statement of decision. The

court noted: "Upon the completion of the reservoir expansion in approximately 1983, the

agents of [Fallbrook] authorized the Chaffins to use the new roadway immediately to the

west of the ODR after completion of the reservoir. Despite the fact that agents of

[Fallbrook] had erected a fence and locked that roadway from general public use, the

Chaffins were given keys to access the roadway and continued their use of this new

roadway for many years, unobstructed, up and until and through the time of this

particular lawsuit." These undisputed facts are sufficient to support the trial court's

finding that the parties impliedly consented to relocate the access easement from the

ODR to the newer road immediately to the west of the expanded reservoir.

              IV. The Trial Court's Interpretation of the Sanitary Easement

       Fallbrook contends that the trial court committed reversible error by failing to rule

on Fallbrook's cause of action for declaratory relief, which Fallbrook characterizes as

asking "the court to determine that Red Mountain's proposed subdivision violated the

[s]anitary [e]asement." Fallbrook argues that the trial court erred by failing to interpret

the sanitary easement, and strongly suggests that the only correct interpretation of the

easement is that it entirely precluded Red Mountain's proposed subdivision.




                                             26
       We find no reversible error in the trial court's handling of Fallbrook's declaratory

relief cause of action. Preliminarily, it is important to clarify exactly what relief

Fallbrook sought in that cause of action. Fallbrook asked the court to enter a judgment

declaring that the "127 acre sanitary easement" was valid and enforceable against Red

Mountain and, as stated in Fallbrook's cross-complaint:

       "d) That pursuant to the [easement], within the 127 ACRES, Fallbrook is entitled to

prevent Red Mountain from excavating, grading, trenching, digging, drilling, or moving

dirt or native soil for any purpose, including but not limited to septic systems, leach lines,

septic tanks, pipelines, roads, footings for house pads, roads, etc.; and

       "e) That pursuant to the [easement], within [the] 127 ACRES, Fallbrook is entitled

to prevent Red Mountain from building or constructing any work of improvement,

including but not limited to roads, septic systems, septic tanks, leach lines, pipelines,

house footings, house pads, houses, barns, landscaping and irrigation systems, or other

structures; and

       "f) That pursuant to the [easement], within the 127 ACRES, Fallbrook is entitled to

prevent Red Mountain from discharging any human or animal waste, insecticides,

pesticides, herbicides or fertilizers of any type on to [sic], in, on top of, or under the soil;

and

       "g) That pursuant to the [easement], Fallbrook is entitled to prevent Red Mountain

from keeping, maintaining, storing, using, applying, or discharging, any HAZARDOUS

MATERIAL; and




                                               27
       "h) That within the 127 ACRES, Red Mountain is not entitled to perform or permit

any other action or activity that violates the terms and conditions of the [easement]."

(Italics added.)

       In short, in its declaratory relief cause of action, Fallbrook asked the trial court to

decide, as a matter of law, that the sanitary easement precluded any and all development

in the easement area; it did not ask the court to decide whether the sanitary easement

precluded Red Mountain from developing Red Mountain Ranch property outside of the

sanitary easement area, or whether use of the access easement for a subdivision would

overburden the sanitary easement. The trial court effectively decided the issue Fallbrook

raised in its pleadings by ruling that it was premature to decide, in the court's words,

"whether [Red Mountain's] proposed development might result in possible contamination

of the [sanitary easement area] . . . ." This ruling implicitly rejects Fallbrook's claim that

the sanitary easement precluded any and all development within the sanitary easement

area as a matter of law, and effectively decided that whether particular development

activities within that area would overburden the sanitary easement was a question of fact

to be decided based on the specific development plan ultimately approved by the county.

The trial court explained: "The final lot subdivision maps have neither been established

nor approved. Until such time as plaintiffs' applications succeed in going through some

kind of approval process . . . and a final lot map is approved, the Court is not in

possession of sufficient facts to determine whether such lots would constitute an

encroachment into the watershed and a risk to the water quality."




                                              28
       The trial court's approach is in accord with the rule that "[w]hether a particular use

of the land by the servient owner, or by someone acting with his authorization, is an

unreasonable interference is a question of fact . . . . [Citations.]" (City of Pasadena v.

California-Michigan Land & Water Co. (1941) 17 Cal.2d 576, 579-580.) The trial court

noted the creation of the sanitary easement in 1949 and ruled that Red Mountain was

bound by its terms. However, the trial court could reasonably conclude that it was not in

a position to rule, as a matter of law, that any development within the area of the sanitary

easement would threaten the reservoir water and thus was precluded.

       In any event, Fallbrook's bid for declaratory relief– i.e., for a judicial

determination that the sanitary easement precluded any development activity within its

area as a matter of law – was rendered moot by Fallbrook's direct condemnation of the

land within the sanitary easement. Once Fallbrook took the sanitary easement acreage by

eminent domain, it was unnecessary for the court to decide whether Red Mountain could

develop that land. To the extent the court erred by not interpreting the sanitary easement

for purposes of the jury's determination of just compensation to be paid by Fallbrook for

the land within the sanitary easement, the error was harmless because the jury valued the

land as undevelopable mitigation land.15



15     Red Mountain presented evidence and argued that the 134.24 acres Fallbrook
directly condemned was worth $10,000 per acre as mitigation land. The jury valued the
land taken at $872,560 or $6,500 per acre ($872,560 divided by 134.24 acres = $6,500
per acre). The jury's valuation was presumably based on the testimony of Fallbrook's
expert appraiser, James Brabant, that similar land sold from a nearby "mitigation bank"
was selling for $6,500 per acre. Referring to sales "going back clear [until] November
2000[,]" Brabant testified that "the prices are almost all at $6,500 an acre. . . . [O]ne of

                                              29
                 V. The Court's Determination of Inverse Condemnation

       Fallbrook contends that the trial court committed reversible error in deciding that

Fallbrook was liable for inverse condemnation. Specifically, Fallbrook contends that

there can be no inverse condemnation because (1) it filed a direct condemnation action;

(2) the access easement was not intended for subdivision use; (3) Fallbrook had a right

not to grant a road easement for a subdivision; and (4) Red Mountain previously gave up

the rights allegedly taken.

       A. Effect of the eminent domain action on the inverse condemnation action

       Fallbrook asserts that once a public entity files a direct condemnation action, an

inverse condemnation claim is subsumed into the direct action and may no longer be

pursued. As authority for that proposition, Fallbrook cites Klopping v. City of Whittier

(1972) 8 Cal.3d 39 (Klopping) and Richmond Redevelopment Agency v. Western Title

Guaranty Company (1975) 48 Cal.App.3d 343 (Richmond). Fallbrook contends that the

trial court's error in allowing Red Mountain to pursue its inverse condemnation cause of

action after Fallbrook filed its direct condemnation action was prejudicial because it

allowed for a double recovery of damages – for both inverse and direct condemnation.

       Preliminarily, we conclude that there was not a double recovery of damages.

Fallbrook's double recovery argument is based on the fact that the 207.38 acre parcel for




the reasons why I didn't increase the value of the property when I updated it was . . . there
had been no price increase. In this mitigation bank, they have stuck with the $6,500 per-
acre figure going clear back to November of 2000 here. So there was no indication of
price appreciation occurring here."


                                             30
which the jury awarded Red Mountain breach of contract/inverse condemnation damages

of $1,464,928 includes the 134.24 acre parcel that Fallbrook directly condemned, for

which the jury separately awarded Red Mountain $872,560 in the direct condemnation

action. The trial court did not err in allowing these separate awards, as the two awards

compensated Red Mountain for different losses that occurred at different times. The

breach of contract/inverse condemnation award compensated Red Mountain for the

diminution in value of the 207.38 southerly acres that resulted from Fallbrook's refusal in

August 2000 to grant the access easement as promised in the 1978 agreement. This

award reflects the jury's finding that without the access easement, the land could be used

only as mitigation land. The jury's eminent domain award compensated Red Mountain

for the 134.24 acres that Fallbrook later directly condemned. The eminent domain award

reflects the jury's finding that on February 1, 2004, the agreed date of value in the direct

condemnation action, the highest and best use of the directly condemned land was as

mitigation land, which was consistent with its award of inverse condemnation/breach of

contract damages. If Fallbrook breached its agreement to convey a personal ingress-

egress easement, Red Mountain would be entitled to compensation for any diminution in

the value of its land suffered in 2000 as a result of that breach, as well as just

compensation for the direct taking of the land by eminent domain in 2004. (See Shealy v.

Unified Government of Athens-Clarke County (Ga.App. 2000) 537 S.E.2d 105, 107-108

[inverse condemnation claim by landowners against counties based on contamination of

their property by landfill was not rendered moot by counties' later direct condemnation of

fee simple title, as damage alleged by landowners in form of diminution in value of their


                                              31
property caused by contamination occurred before the direct taking and, therefore, would

not be recoverable in the eminent domain action]; City of Lake Station v. Rogers (Ind.

1986) 500 N.E.2d 235, 238-239 [landowner should not be denied compensation for

partial taking by inverse condemnation simply because the city later chose to take the

entire fee simple].)

       Neither Klopping nor Richmond precluded Red Mountain from pursuing its breach

of contract/inverse condemnation claims after Fallbrook filed its eminent domain action.

Applying former eminent domain statutes, Richmond held that a property owner's inverse

condemnation cross-complaint was properly struck because it sought the same type of

damages the property owner was required to seek by answer to the direct condemnation

complaint and would have obtained as part of the eminent domain award. However,

Richmond was decided under obsolete eminent domain statutes that required the

defendant property owner to allege the amount of damages claimed by reason of the

taking in the answer to the eminent domain complaint. (See Richmond, supra, 48

Cal.App.3d at p. 351.) In any event, Richmond does not apply here because Red

Mountain did not seek the same type of damages or compensation in its inverse

condemnation cause of action that it could recover in Fallbrook's direct condemnation

action. The inverse condemnation damages Red Mountain sought were for the

diminution in the value of its land that occurred before Fallbrook decided to bring the

direct condemnation action.

       Klopping held that that as between a city's eminent domain action and an inverse

condemnation action involving the same property, the case that proceeds to judgment


                                            32
first is res judicata as to issues common to both actions and bars recovery in the other

action of any damages that were or could have been recovered in the action that

proceeded to judgment first. (Klopping, supra, 8 Cal.3d at p. 58.) Klopping is inapposite

because Fallbrook's eminent domain action and Red Mountain's inverse condemnation

action were consolidated and proceeded to judgment together, and the two actions did not

involve the exact same property, legal issues or damages. In any event, Klopping does

not support the proposition that an inverse condemnation action cannot exist

contemporaneously with an eminent domain action involving the same property.

Klopping contemplates separate, unconsolidated actions pending simultaneously, with

one of the actions proceeding to judgment first and precluding a later judgment in the

other action on the same issues. The trial court did not err in allowing both Red

Mountain's inverse condemnation action and Fallbrook's eminent domain action to

proceed.

       B. Nature of the access easement

       Fallbrook's remaining three contentions as to why the trial court erred in finding

inverse condemnation essentially amount to a single argument: that Fallbrook did not

inversely condemn Red Mountain's land because Red Mountain had no right to an access

easement for purposes of a subdivision.16 We reject Fallbrook's implied premise that as



16     Under separate argument headings, Fallbrook contends there was no inverse
condemnation because (1) the access easement was not for subdivision use; (2) the
sanitary easement gave Fallbrook the right to refuse a road easement for a subdivision;
and (3) Red Mountain had no right to a subdivision easement because its predecessor
agreed to the sanitary easement.

                                             33
a matter of law, Fallbrook's refusal to grant the access easement referenced in the 1978

agreement damaged Red Mountain only if the easement was intended for subdivision

purposes. Fallbrook concedes that it agreed to grant an easement for the Chaffin's

personal ingress to and egress from their property. Whether Fallbrook breached that

agreement and, if so, whether Red Mountain suffered damages as a result, are questions

of fact to be resolved on remand.17

                                VI. Evidence of Damages

       Fallbrook contends that the trial court committed reversible error by admitting

evidence of speculative inverse condemnation damages. Although we reverse the finding

of inverse condemnation, we address this issue for the guidance of the trial court and the

parties in the event of a retrial. (See People v. Neely (1993) 6 Cal.4th 877, 896; Code

Civ. Proc., § 43.) Fallbrook specifically objects to testimony by Red Mountain's expert

appraiser, Robert Backer, who presented four valuation analyses to the jury, two of which

involved valuing the land that Fallbrook directly condemned and calculating severance

damages to the remaining Red Mountain Ranch property. The fourth damage theory,

entitled "Breach Analysis," valued only Red Mountain's southerly 207.38 acres both

before and after Fallbrook's refusal to grant the access easement. As noted, the jury

adopted this damage analysis.




17      Specifically, whether Red Mountain could have developed its southerly 207.38
acres if Fallbrook had granted the limited personal ingress/egress easement it agreed to
grant is a question of fact.

                                            34
       Fallbrook contends that the trial court erred in allowing Backer to present his

breach analysis, his condemnation analysis that was based on Red Mountain having an

approved tentative subdivision map for 44 lots, and his condemnation analysis that was

based on Red Mountain not having an approved map.18 Citing Emeryville

Redevelopment Agency v. Harcros Pigments, Inc. (2002) 101 Cal.App.4th 1083, 1105

(Emeryville), Fallbrook maintains that these analyses were inadmissible because they

constitute speculative evidence of damages based on specific plans of development.

       The trial court has considerable discretion in determining the admissibility of

valuation evidence in condemnation proceedings. (City of San Diego v. Sobke (1998) 65

Cal.App.4th 379, 396.) Accordingly, we review evidentiary rulings for an abuse of

discretion. (City of Ripon v. Sweetin (2002) 100 Cal.App.4th 887, 900.) As a general

rule, "a property owner may not value his property based upon its use for a projected

special purpose or for a hypothetical business. [Citations.]" (County of San Diego v.

Rancho Vista Del Mar, Inc. (1993) 16 Cal.App.4th 1046, 1059.) However, "[w]hile a

property owner may not generally present evidence of the value of his property ' "in terms

of money" ' that the property would bring for a special purpose [citation], evidence of a

particular use may be relevant to establishing the highest and best use since such

evidence may tend to establish the property's adaptability for that kind of use [citations]."

(Id. at pp. 1059-1060.) Generally, evidence that condemned property is suitable for a



18     Fallbrook does not object to Backer's third damage analysis, which valued Red
Mountain's southerly 207.38 acres as mitigation land both before and after Fallbrook
directly condemned 134.24 acres of the land.

                                             35
particular purpose may properly be admitted when the highest and best use of the

property is disputed or there is a dispute as to the feasibility of a particular use.

(Emeryville, supra, 101 Cal.App.4th at pp. 1104-1105; People ex rel. Dept. of

Transportation v. Tanczos (1996) 42 Cal.App.4th 1215, 1219.)

       One of the main disputed issues at the trial in this case was the highest and best

use of the subject property and, in particular, whether a subdivision development on the

property was feasible. Consequently, the trial court did not abuse its discretion in

allowing the jury to hear Backer's various valuations of the property based on Red

Mountain's evidence that that land was suitable for a subdivision development. In any

event, following the directive of Red Mountain's counsel in closing argument, the jury

used Backer's breach analysis, which ignored the majority of Red Mountain's property

and awarded damages based only on use of the southerly 207.38 acres as two ranch

estates. Backer's testimony about this use of the 207.38 acres was admissible "highest

and best use" testimony; it did not constitute testimony about a specific development

plan, as it was not based on evidence of any specific plan for two ranch estates or any

specific features of the hypothetical estates, such as location of the building pads or septic

systems. Backer simply valued the land as being generally useable for two large ranch

estates. The court did not abuse its discretion in allowing Backer's valuation

testimony.19



19      In light of our conclusion that, under section 1069, the access easement referenced
in the 1978 agreement was intended for personal ingress/egress and not for access to a
subdivision development, if the diminution in the value of Red Mountain's land resulting

                                               36
                                    VII. Jury Instructions

       Fallbrook contends that the trial court incorrectly instructed the jury and

erroneously refused to give certain instructions that Fallbrook requested.

       "A party is entitled upon request to correct, nonargumentative instructions on

every theory of the case advanced by him which is supported by substantial evidence."

(Soule, supra, 8 Cal.4th at p. 572.) "A civil litigant must propose complete instructions

in accordance with his or her theory of the litigation and a trial court is not 'obligated to

seek out theories [a party] might have advanced, or to articulate for him that which he has

left unspoken.' [Citations.]" (Mesecher v. County of San Diego (1992) 9 Cal.App.4th

1677, 1686.) Instructional error in a civil case is not ground for reversal unless it is

probable the error prejudicially affected the verdict. (Soule, supra, 8 Cal.4th at p. 580.)

In determining whether instructional error was prejudicial, a reviewing court must

evaluate "(1) the state of the evidence, (2) the effect of other instructions, (3) the effect of

counsel's arguments, and (4) any indications by the jury itself that it was misled." (Id. at

pp. 580-581, fn. omitted.)

       "Instructions should state rules of law in general terms and should not be

calculated to amount to an argument to the jury in the guise of a statement of law.

[Citations.] Moreover, it is error to give, and proper to refuse, instructions that unduly

overemphasize issues, theories or defenses either by repetition or singling them out or




from Fallbrook's refusal to grant an access easement becomes an issue on remand, the
issue is likely to be limited to diminution in the value of Red Mountain's southerly 207.38
acres.

                                              37
making them unduly prominent although the instruction may be a legal proposition.

[Citations.]" (Fibreboard Paper Products Corp. v. East Bay Union of Machinists (1964)

227 Cal.App.2d 675, 718.) Finally, "[e]rror cannot be predicated on the trial court's

refusal to give a requested instruction if the subject matter is substantially covered by the

instructions given. [Citations.]" (Id. at p. 719; Hyatt v. Sierra Boat Co. (1978) 79

Cal.App.3d 325, 335.)

       A. Instructions given

       Fallbrook first argues that the trial court erred in instructing the jury that it had to

follow the court's rulings from the first phase of the trial. The trial court erred in

instructing the jury to follow its legal rulings only to the extent those rulings were

erroneous. Because we have addressed Fallbrook's challenges to the trial court's legal

rulings above, we will not further address those rulings in the context of alleged

instructional error.

       Fallbrook next argues that the instructions the trial court gave regarding damages

for breach of contract and inverse condemnation were erroneous because they did not

instruct how those damages relate to just compensation in Fallbrook's direct

condemnation action. Fallbrook complains that the direct condemnation action required

the jury to value the same land at issue in the breach of contract/inverse condemnation

action and, therefore, the trial court should have given an explicit instruction that the jury

could not award duplicative damages, and that awarding damages twice for the same loss

is duplicative as a matter of law.




                                              38
       Fallbrook's argument is not so much a claim of instructional error as a legal

argument that Red Mountain may not recover compensation for the diminution in value

of its 207.38 southerly acres as a result of any breach of contract by Fallbrook in August

2000, and also recover compensation for the portion of that land that Fallbrook later

directly condemned. As we discussed above, we reject this argument because the breach

of contract/inverse condemnation award and the eminent domain award did not

compensate Red Mountain twice for the same loss; they compensated Red Mountain for

different losses that occurred at different times.

       B. Instructions refused

       Fallbrook contends that the trial court erred by refusing to give the following

instructions: (1) that a plaintiff may not recover the same damages for both a breach of

contract claim and a tort claim that are based on the same facts (CACI No. 361); (2) that

the owner of the dominant estate must use its easement in such a way as to impose as

slight a burden as possible on the servient estate; (3) that a sanitary easement is similar to

a conservation easement; (4) that Fallbrook was not obligated to grant the access

easement if the jury found the requested easement would overburden Fallbrook's sanitary

easement and reservoir; and (5) that the jury is not "permitted to value the property with

reference to what it was worth to the defendant for speculatiion or merely for possible

uses . . . ." (BAJI 11.75.)

       1. Failure to instruct with CACI No. 361

       CACI No. 361 instructs that when a plaintiff has brought claims in both contract

and tort against a defendant and the jury finds that the plaintiff "has proved both claims,


                                              39
the same damages that resulted from both claims can be awarded only once." Fallbrook

argues that the trial court's failure to give this instruction allowed the jury to improperly

award duplicative damages for breach of contract/inverse condemnation and Fallbrook's

direct condemnation.

       Preliminarily, the record does not clearly show that Fallbrook requested that the

trial court give CACI No. 361. The only indication in the record that the trial court

considered giving this instruction is a letter from Fallbrook's counsel to the trial court

expressing Fallbrook's opposition to a proposed final judgment. In that letter, Fallbrook's

counsel states that after discussing the issue of duplicative damages "with both counsel,

the court decided not to give CACI 361 . . . since the court would ensure there would be

only one award for damages." In any event, Fallbrook was not prejudiced by the court's

refusal to give a duplicative damages instruction because the judgment does not award

duplicative damages. As discussed above, the compensation the jury awarded Red

Mountain for the land Fallbrook directly condemned was not duplicative of the jury's

award of breach of contract/inverse condemnation damages.

       2. Failure to instruct that the owner of the dominant estate must use its easement
in such a way as to impose as slight a burden as possible on the servient estate

       Fallbrook contends that the trial court should have instructed the jury that the

owner of the dominant estate must use its easement in such a way as to impose as slight a

burden as possible on the servient estate, as stated in Locklin v. City of Lafayette (1994)

7 Cal.4th 327, 356. This proposed instruction presumably concerns the access easement,




                                              40
not the sanitary easement, since Fallbrook would have been the owner of the servient

estate as to the access easement, if the easement had been granted.

       Fallbrook does not explain in its opening brief why the trial court's rejection of this

instruction was erroneous or how it prejudicially affected the verdict. The only argument

on this point is in Fallbrook's reply brief, in which Fallbrook asserts that "[t]he jury was

given no guidance as to what the fee owner could or could not do as compared to the

rights of the easement holder." Fallbrook presumably requested this instruction in

connection with its theory that it was excused from its contractual obligation to grant Red

Mountain an access easement under the 1978 agreement because Red Mountain's

intended use of the easement for a large subdivision would overburden Fallbrook's

servient estate by threatening the reservoir.

       The trial court properly refused to give this instruction, as it is argumentative and

unduly emphasizes Fallbrook's overburdening theory. Further, the subject matter of the

instruction and the legal point Fallbrook presumably intended it to convey regarding a

dominant estate owner's duty not to overburden the servient estate was substantially

covered by the following portion of a special instruction the trial court did give:

"Overburdening an easement is defined as a use which unreasonably increases the

burden on the servient estate and depends on the facts of each case. Every easement

includes the right to do such things that are necessary for the full enjoyment of the

easement itself. But this right must be exercised in such a reasonable manner as to not

injuriously increase the burden on the servient estate." (Italics added.) Fallbrook has not




                                                41
shown that the trial court prejudicially erred by refusing to give Fallbrook's proposed

special instruction based on Locklin.

       3. Failure to give requested instruction regarding the sanitary easement

       Fallbrook contends that the trial court erred in refusing to give the following

instruction, which includes the definition of "conservation easement" in the exact

language of Civil Code section 815.1: A sanitary easement is similar to a conservation

easement and means "any limitation in a deed will or other instrument in the form of an

easement, restriction, covenant, or condition, which is or has been executed by or on

behalf of the owner of the land subject to such easement and is binding upon successive

owners of such land, and the purpose of which is to retain land predominantly in its

natural, scenic, historical, agricultural, forested or open-spaced condition."

       The trial court properly rejected this instruction because the sanitary easement is

not a conservation easement. The purpose of the sanitary easement is to enable Fallbrook

"to patrol, control and maintain sanitary conditions [in the easement area] necessary and

adequate to keep the water stored in [the] reservoir . . . free from contamination from

[the] surrounding watershed area and to enable [Fallbrook] to comply with [public health

laws and regulations] . . . ." Whether protecting the reservoir water and complying with

public health laws require that Fallbrook maintain the easement area "predominantly in

its natural, scenic, historical, agricultural, forested or open-spaced condition" was a




                                             42
disputed factual issue at trial.20 Fallbrook's proposed "conservation easement"

instruction would have effectively directed the jury to find, as a matter of law, that the

sanitary easement imposed the same restrictions on Red Mountain's use of the easement

area that a conservation easement would have imposed. The trial court properly refused

the instruction, as it is both argumentative and legally incorrect.

       4. Failure to instruct that Fallbrook was not obligated to grant a subdivision
access easement if the jury found that such an easement would overburden Fallbrook's
sanitary easement and reservoir

       Fallbrook contends that the trial court erred in refusing to give its proposed special

instruction that states, in relevant part: "The Chaffins have requested a road easement for

a proposed development. [Fallbrook] has refused to grant the road easement. If you find

the requested road easement would overburden Fallbrook's 1949 [s]anitary [e]asement

and reservoir, then Fallbrook was not obligated to grant the easement to the Chaffins."

Fallbrook argues that the trial court should have given this instruction because it is

consistent with the sanitary easement and with Civil Code section 815.7.

       Civil Code section 815.7 concerns enforcement of conservation easements, and

thus is inapplicable to this case. In any event, the essential point of the refused

instruction – that Fallbrook was excused from granting the access easement if the

easement would threaten the reservoir – was substantially and less argumentatively

covered by the following special instruction that the court did give regarding Fallbrook's




20     Red Mountain presented expert testimony that proposed development within the
sanitary easement area would not cause contamination of the reservoir.

                                              43
ability of performance: "Fallbrook . . . has the burden to show that performance of the

contract was excused and the contract discharged because performance of the contract

became impossible except at impractical, excessive, unreasonable expense or risk of

injury not contemplated by the parties at the time the contract was made." This

instruction, along with the above-noted instruction defining "overburdening an

easement," adequately conveyed to the jury that Fallbrook was excused from performing

its contractual obligation to grant the access easement agreement if the jury found that

performance would overburden the sanitary easement and risk contamination of the

reservoir. The court did not prejudicially err in refusing Fallbrook's special instruction.

       5. Failure to give BAJI No. 11.75

       Finally, Fallbrook contends that the trial court erred in refusing to give BAJI No.

11.75, which instructs the jury in an eminent domain case that it is "not permitted to

value the property with reference to what it was worth to the defendant for speculation or

merely for possible uses . . . ." Fallbrook contends that it was error to refuse to give this

instruction because the trial court allowed speculative testimony and evidence about Red

Mountain's uses of the property. We reject this contention in light of our conclusion that

the evidence in question was not inadmissibly speculative; rather, it constituted

admissible evidence of the property's highest and best use. Moreover, the subject matter

of the portion of BAJI No. 11.85 in question was substantially covered by the following

modified version of BAJI No. 11.86 (regarding severance damages), which the trial court

gave: "In assessing the damages, if any, to the [eminent domain] defendant's remaining

property, caused by the project, you are not permitted to consider any factors that are


                                              44
speculative or imaginary, or any purely personal elements that do not affect the property's

fair market value. Severance damages can, however, be based on any factor, resulting

from the project, that causes a decline in the fair market value. [¶] Damages are not to be

enhanced for frustration of a proposed development which is speculative and

conjectural." (Italics added.) The trial court did not commit reversible instructional error

in refusing to give BAJI No. 11.75.

                                    VIII. Verdict Form

       Fallbrook contends that the trial court prejudicially erred by refusing to include

Fallbrook's contract defense of impossibility or impracticability of performance in the

special verdict form and by failing to ensure that the verdict form protected against

duplicative damages.

       The use of special interrogatories in a verdict form lies within the sound discretion

of the trial court, and the court's determination will not be disturbed on appeal absent a

clear abuse of discretion. (Masonite Corp. v. Pacific Gas & Electric Co. (1976) 65

Cal.App.3d 1, 11-12.) The trial court's refusal to include specific questions about

impossibility or impracticability of performance in the verdict form was not an abuse of

discretion, nor was it prejudicial, because, as discussed above, the jury was instructed to

find that Fallbrook's performance of the contract was excused and the contract discharged

if Fallbrook met its burden of proving that its performance became "impossible except at

impractical, excessive, unreasonable expense or risk of injury not contemplated by the

parties at the time the contract was made." We presume that the jury followed the

instructions it was given (Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 803), and


                                             45
that it would not have found that Fallbrook breached its agreement to grant the access

easement if it had found that Fallbrook's performance was impossible or impracticable.21

       To the extent the court erred by not ensuring that the verdict form protected

against duplicative damages, the error was harmless because, as discussed above, there

was no award of duplicative damages.

                            VIII. Award of Litigation Expenses

       Red Mountain filed a motion to recover its litigation expenses, including expert

and attorney fees, under Code of Civil Procedure sections 1036 "and/or" 1250.410. Red

Mountain sought expert witness fees in the amount of $221,079 and attorney fees in the

amount of $222,737, plus $4,000 for bringing the motion. The court granted Red

Mountain's motion "in its entirety."

       Code of Civil Procedure section 1036 provides: "In any inverse condemnation

proceeding, the court rendering judgment for the plaintiff by awarding

compensation . . . shall determine and award or allow to the plaintiff, as a part of that

judgment . . . a sum that will, in the opinion of the court, reimburse the plaintiff's



21     When Fallbrook's counsel asked the trial court to include the defense of
impossibility or impracticability in the verdict form, the court noted that the defense was
covered by a jury instruction and advised counsel that it was his job to argue the defense
as a basis for answering "no" to the special verdict question of whether Fallbrook had
breached the contract to grant the access easement. During closing argument, Fallbrook's
counsel quoted the above-noted instruction regarding impossible or impractical
performance and argued that the jury should find that Fallbrook had not breached the
contract, stating: "Nobody contemplated in 1978 or back in 1949 that there was going to
be a subdivision which was going to cause – or potentially contaminate the reservoir.
That's why Fallbrook did what it did."


                                              46
reasonable costs, disbursements, and expenses, including reasonable attorney, appraisal,

and engineering fees, actually incurred because of that proceeding in the trial court or in

any appellate proceeding in which the plaintiff prevails on any issue in that proceeding."

In awarding litigation expenses under this section, the trial court generally should

apportion between attorney fees incurred in litigating the inverse condemnation claim and

fees incurred with respect to other claims for which attorney fees are not recoverable, and

award only the former. (Greater Westchester Homeowners Assn. v. City of Los Angeles

(1979) 26 Cal.3d 86, 103-104; Salton Bay Marina, Inc. v. Imperial Irrigation Dist.,

(1985) 172 Cal.App.3d 914, 958.) However, the trial court has discretion to award fees

incurred with respect to a non-inverse condemnation cause of action that is relevant to the

inverse condemnation claim. (Salton Bay Marina, Inc. v. Imperial Irrigation Dist, supra,

172 Cal.App.3d at p. 958.)

       Code of Civil Procedure section 1250.410, subdivision (b) authorizes the trial

court to award litigation expenses to the defendant in an eminent domain case "[i]f the

court, on motion of the defendant made within 30 days after entry of judgment, finds that

the offer of the plaintiff was unreasonable and that the demand of the defendant was

reasonable viewed in the light of the evidence admitted and the compensation awarded in

the proceeding . . . ." The "purpose [of Code of Civil Procedure section 1250.410] is to

encourage settlement of condemnation actions by providing incentives to a party who

submits a reasonable settlement offer or demand before trial. [Citation.] A property

owner who files a reasonable demand, but is required nonetheless to litigate because of

the public agency's unreasonable position, can be fully compensated for his litigation


                                             47
expenses." (Santa Clara Valley Water Dist. v. Gross (1988) 200 Cal.App.3d 1363,

1368.) "Several factors have emerged as general guidelines for determining the

reasonableness or unreasonableness of offers [in eminent domain cases]. They are ' "(1)

the amount of the difference between the offer and the compensation awarded, (2) the

percentage of the difference between the offer and award . . . and (3) the good faith, care

and accuracy in how the amount of offer and the amount of demand, respectively, were

determined." ' [Citation.] Thus, the mathematical relation between the condemner's

highest offer and the award is only one factor that should enter into the trial court's

determination. [Citations.]" (Los Angeles County Metropolitan Transportation Authority

v. Continental Development Corp. (1997) 16 Cal.4th 694, 720.)

       Fallbrook contends that its final settlement offer of $900,000 was reasonable as a

matter of law under Code of Civil Procedure section 1250.410 because it was greater than

the jury's direct condemnation award of $872,560. Fallbrook maintains that the trial

court should not have awarded Red Mountain all of its attorney and expert fees for the

entire action without apportioning the award between the breach of contract claim, the

inverse condemnation claim, and the direct condemnation action.22 Red Mountain

characterizes Fallbrook's argument as "disingenuous" because Fallbrook's final offer of

$900,000 was a proposal to settle both the inverse and direct condemnation actions, and

thus was less than half of the combined award of $2,337,488. Noting that an award of




22     Fallbrook's position apparently is that the trial court should have awarded fees
with respect to the inverse condemnation claim only.

                                              48
litigation expenses is required in an inverse condemnation action regardless of any final

offer and demand, Red Mountain cites Salton Bay Marina, Inc. v. Imperial Irrigation

Dist., supra, 172 Cal.App.3d at p. 958, for the proposition that the trial court has

discretion not to apportion fees and costs attributable to an inverse condemnation claim

when that claim is tried in conjunction with another claim.

       The trial court effectively awarded fees and expenses under both statutes. It ruled

that "[Red Mountain's] Motion for Recovery of Litigation Expenses pursuant to [Code of

Civil Procedure section] 1036 and [Code of Civil Procedure section] 1250.410 on the

grounds that [Red Mountain] prevailed on its inverse condemnation cause of action and is

entitled to fees and expenses as a matter of law, that Red Mountain's final demands and

settlement offers to compromise were reasonable and that [Fallbrook's] final offer and

failure to negotiate were unreasonable, and that [Fallbrook] did not act with good faith,

care and accuracy in its negotiations in dealing with Red Mountain, and that the amount

of Red Mountain's litigation expenses are reasonable, is granted in its entirety." (Italics

added.) The trial court thus impliedly found that Fallbrook's final offer of $900,000 was

unreasonable under Code of Civil Procedure section 1250.410 as to the direct

condemnation case because that offer encompassed a proposed settlement of the inverse

condemnation case as well.

       The trial court could reasonably find that Fallbrook's final offer to settle the entire

action was unreasonable as to the direct condemnation case given the substantial

difference between the offer and the compensation awarded Red Mountain for the entire

action. Accordingly, it was not an abuse of discretion for the trial court to award


                                              49
litigation expenses for both the direct and inverse condemnation actions under Code of

Civil Procedure sections 1250.410 and 1036 respectively. However, retrial of the inverse

condemnation and breach of contract claims could result in either a finding of no liability

for inverse condemnation and thus no damages, or a substantially lower award of

damages than the inverse condemnation/breach of contract award in the first trial, and

retrial of direct condemnation case could result in a higher award of just compensation.

Depending on the outcome, the trial court might reasonably conclude that Fallbrook's

final offer of $900,000 was reasonable with respect to the direct condemnation case, and

decline to award litigation expenses under Code of Civil Procedure section 1250.410. If

Red Mountain recovers inverse condemnation damages and the court finds Fallbrook's

final offer was reasonable with respect to the direct condemnation case, Red Mountain

would be entitled to recover litigation expenses only under Code of Civil Procedure

section 1036 with respect to its inverse condemnation claim, and the trial court would

have to apportion fees to exclude time spent on the direct condemnation case, unless it

found that the two matters were sufficiently related to justify an award of litigation

expenses as to both. Accordingly, we reverse the award of litigation expenses and

remand the matter to the trial court for redetermination based on the outcome of the

retrial.

                                        DISPOSITION

           The judgment is reversed and the cause matter is remanded for retrial. The

postjudgment order awarding Red Mountain litigation expenses under Code of Civil

Procedure sections 1036 and 1250.410 is reversed and the matter is remanded for


                                               50
redetermination in light of the outcome of the retrial. The stay this court issued on

September 8, 2004 is vacated. The parties shall bear their own costs on appeal.

CERTIFIED FOR PUBLICATION




                                                                                AARON, J.

WE CONCUR:



         HUFFMAN, Acting P. J.



                   McINTYRE, J.




                                             51

				
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